Guggenheim Initiates Buy on Opko Health Inc. (OPK), Sees 210% Upside for the Stock

In a research report released today, Guggenheim analyst Louise Chen initiated coverage on shares of Opko Health Inc. (NASDAQ:OPK) with a Buy rating and price target of $25, which implies an upside of about 210% from current levels.

Chen’s investment thesis is supported by three points:

  • CEO and Chairman, Dr. Phillip Frost, has a demonstrated record of success in building pharmaceutical companies.
  • Rayaldee sales could approach $700MM in ‘21. Rayaldee is approved for the treatment of Secondary Hyperparathyroidism (SHPT) in adult patients with stage 3 or 4 Chronic Kidney Disease (CKD). The product has patent protection that could extend through ‘34.”
  • OPK’s pipeline could have several billion dollars of potential sales. Key pipeline drugs OPK is developing include: long-acting Factor VIIa in Phase 2a, targeting a ~$1.7B market; Oxyntomodulin, which starts Phase 2b 2H17; a NK-1 inhibitor for itch in Phase 2a; and, a SARM entering Phase 2b 2H17. Brand drugs and royalties from partnered products (Varubi/Tesaro and hGH-CTP/Pfizer) have higher margins than the diagnostics business (drugs and royalties/80%-100%, diagnostics/50%-60%). This could drive triple-digit EBITDA growth for OPK versus high-teens to low double-digit EBITDA growth for its competitors.

According to TipRanks, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Louise Chen has a yearly average return of -13.4% and a 35% success rate. Chen is ranked #4405 out of 4517 analysts.

Out of the four analysts polled in the past three months, three rate Opko stock a Buy, while two rate the stock a Hold. With a return potential of 63%, the stock’s consensus target price stands at $13.38.


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